Buy-to-let mortgage arrears continued their downward trend in Q1 2026, falling to 8,960 cases, according to the latest data published today by UK Finance.
That represents a 6% drop quarter-on-quarter and a 24% fall compared with the same period last year, when 11,830 BTL mortgages were in arrears.
The overall proportion of BTL mortgages in arrears now stands at just 0.47%, the lowest rate recorded since before the cost-of-living crisis began to bite in 2022. For context, BTL arrears peaked at 13,570 in Q4 2023.
Arrears are falling across every severity band. The lightest category, where borrowers are between 2.5% and 5% in arrears on their outstanding balance, dropped 7% quarter-on-quarter to 3,220 cases, and is down 26% year-on-year.
The most severe band, where arrears exceed 10% of the outstanding balance, fell 3% on the quarter and 13% year-on-year, to 3,200 cases. The two middle bands, covering arrears of 5% to 10% of the outstanding balance, also improved, with the 7.5% to 10% band recording the sharpest quarterly fall at 12%.
Homeowner arrears followed a similar trajectory. There were 79,110 homeowner mortgages in arrears in Q1 2026, 2% fewer than in Q4 2025 and 12% lower year-on-year.
On possessions, the picture is more measured. There were 810 BTL mortgaged properties taken into possession in Q1 2026, up 5% on the previous quarter but flat year-on-year. Homeowner possessions rose 3% quarter-on-quarter to 1,250, also up 2% on the same quarter a year ago. Both figures remain significantly below long-term historic averages. The data traces a clear arc of improvement across the BTL market.
From the peak of 13,570 BTL arrears cases in Q4 2023, the number has fallen in every subsequent quarter, reflecting easing mortgage rates and a stabilisation in landlord finances following several difficult years of rising costs and regulatory change.
The next update from UK Finance is scheduled for 13 August 2026.
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